EU Attention Finally Rests on the Balkans Amid Growing Chinese Influence
There are currently five major Balkan candidates for EU enlargement: Bosnia and Herzegovina, Kosovo, Albania, and North Macedonia and Turkey. While talks with Turkey have stuttered, the remaining countries could prove pivotal for the EU to continue its policy of enlargement of its union of democratic markets. But have they left it too late and allowed China to gain a foothold within Europe both financially and politically?
It was agreed at the European Council summit in 2003 that including the Western Balkans was important in stabilising the most volatile of political regions in Europe, yet it still hasn’t happened.
In 2019, the enlargement policy of the EU continues to cite the Western Balkans as a priority, but since 2013, politically and economically its attention has been diverted by structural failings of the Eurozone in Greece, Portugal, Ireland and Italy.
Italy’s 2018 budget policy drew criticism from the EU, forcing it to change tack. Greece only managed to exit the three-year Eurozone bail-out programme it was provided in 2015 in August 2018, as illustrated by DailyFX's research on the eurozone debt crisis. Brexit negotiations over the last two years have also stalled EU focus, making it more prudent than ever that the EU finally draws its attention to the Balkan region. For the EU to continue to ignore appeals from the region to join it provides the opportunity for China to exert greater influence in the region.
Politically and socially, the EU continues to push for reforms with its Balkan neighbours, with Emmanuel Macron and Angela Merkel leading the call for internal reforms, which resulted in North Macedonia holding a referendum last year to rename itself.
China has been interested in the Balkans for a long time. It is the crossroads into Europe and an area in need of substantial investment in comparison to its more affluent Western European member states. It is also an area with high levels of unemployment, weak democratic institutions, dubious levels of corruption and in real need of infrastructure development.
In 2013, President Xi Jinping announced the Belt and Road Initiative, which sought to enhance trade with the Middle East, Africa and Europe. By 2019, China's presence has become widespread. In Croatia, it's Chinese finance that is helping to build infrastructure like motorways and power plants, pushing up public debt levels and increasing Chinese influence in the region where investment nearly always comes with strings attached.
China currently has almost $5 billion of deals in North Macedonia, Montenegro, Serbia, and Bosnia and Herzegovina: a huge investment into relatively small economies. Construction of a highway between the Serbian capital of Belgrade and the Montenegrin coast comes at a cost. China’s policy of state loans and investing in infrastructure projects nearly always have conditions attached.
China’s acquisition of steel mills in Serbia alongside huge construction projects like the Peljesac Bridge in Croatia has meant public borrowing has spiralled. If the EU was concerned about the debt crisis in Greece, Portugal and Italy, it should be even more concerned about the consequences of potential debt burdens of future member states in the Balkans.
The EU has always extolled that its vision for the region is to make a union of democracies, but this also means acknowledging that the area needs huge political, financial and infrastructure reforms. As the EU’s enlargement policy stalls on a political level, China is making big ingresses through financial and infrastructure investment. It leaves the EU at a crossroads while China builds bridges, both real and ideological.
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